The National Association of Automobile Manufacturers of South Africa wants members to have permission to resume operations this Friday as the country’s lockdown deescalates from a full level 5 lockdown to a level 4.
The association’s president Tim Abbott wrote to Minister of Trade, Industry and Economic Development, Ebrahim Patel over the weekend saying the industry had assessed its risk of transmission, the impact of the lockdown, the export business, and the effect of lockdown on livelihoods and on jobs.
Accordingly, “…we are convinced that, with the measures we have put in place, the automotive industry should be allowed a staggered return to work.”
Last week President Cyril Ramaphosa announced a five-level system would be put in place from May 1 to allow the economy to return to function in phases. Ramaphosa said industries which will have restrictions eased would be spelled out this week, following consultations.
This system looks to start up the economy again while still minimising movement because of the risk of Covid-19 transmission. The pandemic has seen the globe and South Africa entering into a recession, raising question marks about demand for new vehicles.
In any event, Abbott wrote in his letter to the minister that the future of the local automotive industry depended on large-scale vehicle production and that exports remained key to achieving improved international competitiveness.
“Many of our local original equipment manufacturers have grown their export volumes organically, and they now produce a very high proportion of vehicles for the export market, aggregated at 64,1% in 2019,” Abbott wrote.
Abbott said the export value of vehicles and automotive components stood at R201.7 billion, equating to 15.5% of South Africa’s total exports. He said 387 125 vehicles worth R148 billion and R53.7 billion in automotive components, were exported to 151 countries in 2019.
Old Mutual investment strategist Izak Odendaal expects government to be approached by various other industries and that assessments of these requests will be done on a case by case basis.
“I think it’s a big sector and is a big contributor to the economy. The sooner it can start up, from an economic point of view, the better. Of course, the government is trying to balance health concerns with economic concerns. There is no playbook for this.”
Economist for Econometrix Azar Jammine said the automobile manufacturers could benefit from returning to operations at this time and take advantage of a weak currency which would make exports cheaper. He said the ports should allow for the exports of those vehicles and parts, if the sector to fully benefit.
The rand at R18.20 to the US dollar is close its weakest level on record.
Spokesperson for trade, industry and economic development Sidwell Medupe could not be reached to respond to questions on when the final determinations for industries at different levels will be announced. Naamsa said they needed a response from the minister by close of business on Wednesday.